7 comments:

How many workers who are now paid $8 are not generating more than $9 of revenue? That's the only way raising the minimum wage to $9 will cause unemployment. Doubt it will cause a measurable increase in unemployment. If they do get fired, they probably deserve it. Meanwhile, plenty who are underpaid will get a little more.

There isn't a day that goes by that I see some moron fail to understand what a conflicted, co-opted propagandized mouthpiece looks like....

The Tyranny of Forced CorrelationsIn this case, it acts as a subsidy to leverage of all kinds, rewarding the rich, who are generally far more able to borrow large amounts than the middle classes. It also rewards hedge funds and private equity funds, who are only able to access returns comparable to those of investing in equities by using their access to cheap leverage. By rewarding certain groups of investors at the expense of the population as a whole (who find their income returns from investments ground down by year after year of cheap money), it forces correlations between asset classes that speculators find profitable.

One such correlation involves a massive effective subsidy to residential mortgage real estate investment trusts (REITs). Short-term interest rates are held down artificially near zero, while long-term interest rates are prevented from rising substantially by Fed quantitative easing (at least mortgage REIT sponsors think so). Thus for the last five years mortgage REITs have been able to leverage themselves in the short-term market and buy government-guaranteed home mortgages, leveraging the spread between the two interest rates. If that spread is 2.5%, and a mortgage REIT is leveraged 10 to 1, it can make a return of 25% on its capital, plus whatever return it gets on the mortgages purchased with its equity. That in turn allows it to pay dividend yields above 10%, and leads the shares to trade well above their book value—that in turn allows the mortgage REIT to carry out repeated stock issues, growing exponentially by doing so.

Chartalism: Another term for the State Theory of Money. As Henry Liu has described it, “When the state issues fiat money under the principle of Chartalism, the something of value behind it is the fulfillment of tax obligations. Thus the state issues a credit instrument, called (fiat) money, good for the cancellation of tax liabilities. By issuing fiat money, the state is not borrowing from anyone. It is issuing tax credit to the economy.” (“Dollar Hegemony Against Sovereign Credit,” Asia Times, June 24, 2005.)

Chicago Boys: The University of Chicago economists brought to Chile in 1974 by its military dictatorship to turn economic control over to the junta’s supporters. Euphemizing their policy as introducing “free markets,” the Chicago Boys engineered a free lunch by giving away public enterprises. To silence criticism, they shut down every economics department in Chile except that of the Catholic University where the Chicago School had gained control. (See Labor Capitalism, Privatization and Washington Consensus.)

Chicago School: Named after the University of Chicago’s Business School where Milton Friedman and other monetarists established an early beachhead. The essence of their ideology is that government has no positive role, being only a deadweight burden. Starting with John D. Rockefeller, substantial funding for these economists came from rentiers seeking to replace the tax burden on property, monopoly power and finance with a tax shift onto the rest of the economy and give free reign for the FIRE sector to charge rent and interest free of regulation. Hence the euphemism “free-market school.” (See Free Lunch and Market Fundamentalism.)

We continue our coverage of the 40th anniversary of the overthrow of Chilean President Salvador Allende with a look at the critical U.S. role under President Richard Nixon and his national security adviser, Henry Kissinger. Peter Kornbluh, who spearheaded the effort to declassify more than 20,000 secret documents that revealed the role of the CIA and the White House in the Chilean coup, discusses how Nixon and Kissinger backed the Chilean military’s ouster of Allende and then offered critical support as it committed atrocities to cement its newfound rule. Kornbluh is author of the newly updated book, "The Pinochet File: A Declassified Dossier on Atrocity and Accountability," and director of the Chile Documentation Project at the National Security Archive. In 1970, the CIA’s deputy director of plans wrote in a secret memo: "It is firm and continuing policy that Allende be overthrown by a coup. ... It is imperative that these actions be implemented clandestinely and securely so that the USG [the U.S. government] and American hand be well hidden." That same year President Nixon ordered the CIA to "make the economy scream" in Chile to "prevent Allende from coming to power or to unseat him." We’re also joined by Juan Garcés, a former personal adviser to Allende who later led the successful legal effort to arrest and prosecute coup leader Augusto Pinochet.